In what might one day be a textbook example of how to ruin a comparably prosperous state’s economy, the Texas Senate could be considering a business income tax in the very near future. Taking such a reckless action amounts to political and economic suicide.
State Sen. Steve Ogden (R-Bryan) filed Senate Joint Resolution 52 last week (a month after the filing deadline) that would change the state constitution to allow for a state business income tax by modifying the existing prohibition against all such taxes in the Lone Star State. That his fellow senators allowed Mr. Ogden to file the legislation after the deadline isn’t a good sign for taxpayers.
Shouldn’t be too surprising.
We are, of course, talking about the same Texas Senate which is looking to pass a budget that spends more money than the state has revenues. The same Texas Senate that had a secretive subcommittee just a week ago caught exploring ways to levy a billion dollars in new taxes without calling them taxes. And the same Texas Senate looking to raid the Permanent School Fund.
Texas’ Constitution currently prohibits the imposition of an income tax. Under Article VIII, Section 24, the legislature cannot do so without a statewide referendum. Mr. Ogden, however, would change the constitutional prohibition by saying it “does not apply to a tax imposed on a business entity.”
You’d only do that if you were planning on imposing such a tax on Texas’ business.
Levying business income taxes are a great way to kill an economy.
Just look at California, with it’s 8.84% levy. Or Illinois’ 9.5%, New York’s 7.1%, and New Jersey’s 9%.
Every state levying state business income taxes have higher overall tax burdens than Texas, and worse unemployment. And not surprisingly, those states have been losing businesses to Texas.
That’s why a delegation from California was recently in Texas, trying to learn what policies we have in place that have lured so many businesses from them. Now it appears Mr. Ogden and his colleagues are poised to bring a little California irresponsibility to the Lone Star State.
For a state senate apparently obsessed with spending a lot more of your money, killing the goose laying the state’s golden economic eggs probably makes contorted sense.
With Lt. Gov. David Dewhurst stressing his low-tax, pro-business, conservative bona fides, and every single state senator up for election in 2012, imposing a business income tax shouldn’t have much of a chance. But then, those same senators did allow Mr. Ogden to late-file his bill…
Rather than seeking new ways to drain money from the productive economy, Texas’ senators should get serious about passing a budget like the House did — one that lives within Texans’ means.